Supreme Court NLRB Decision Has Ripple Effects for Lenders

Last week, the U.S. Supreme Court determined that the Obama administration's recess appointments of three National Labor Relations Board judges were invalid and unconstitutional. As a result, all of the decisions of the NLRB in which any of these judges participated are void. Including all published and unpublished decisions, some 1,058 rulings are effectively invalid. These include decisions that affect both unionized and non-unionized employers.

There are countless hundreds of other cases that relied in whole or part upon the precedents established in these cases to reach additional decisions. These cases, if still pending, could also be subject to review/reconsideration to the extent the now invalid precedent impacted earlier rulings.

One case that could particularly interest lenders is the D.R. Horton decision, which is now invalid as a result of the Supreme Court's ruling. This now invalid decision was groundbreaking in that it held class waiver arbitration agreements were unenforceable, notwithstanding Supreme Court precedent to the contrary. Although D.R. Horton was already rejected by multiple circuit courts, the fact that it is now invalid precludes its use anywhere—and the use of all other cases that relied upon it as precedent—to support any holding that refuses to enforce a class action waiver.

In other words, whereas D.R. Horton had been rejected in every circuit that had considered it, courts residing in circuits that had not yet reviewed D.R. Horton were—until the Supreme Court's holding—free to adopt the NLRB's D.R. Horton decision. Now, decisions such as D.R. Horton have for all intents and purposes disappeared unless the NLRB reissues those decisions after consideration by a fully confirmed board of NLRB judges.

Whatever the outcome, the Supreme Court’s decision could literally re-write the law and for litigants involved in cases directly and/or indirectly affected by these now invalid decisions. Their legal position may have fundamentally changed.

Comments (2)

Heck we could also extrapolate that CFPB Director was not a valid Director and all the Rules put in place have to be re-proposed and with new Small Business panels and comment periods. Further all fines taken must be refunded, and on and on.

SCOTUS seems to opening a whole pile of can of worms for the lawyers to fight over during the past 2 weeks.

Posted by brian B | Monday, July 07 2014 at 2:31PM ET

The Presidents decision to do an "end-around" on the constitution in such matters has turned around and bit him. As a result, any undoings resulting from this over-reach of authority fall squarely on this administration.